So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid,” which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate.

As I mentioned above, Techcruch commentary suggests that the move will protect Android developers:

Google has announced that it’s going to help fend off attacks on both itself and ecosystems of projects like Android and Chrome by bidding on the Nortel patent portfolio — a trove of 6,000 valuable patents that relate to a variety of technologies including wireless, 4G, data networking, and more. Which, should Google win them, would be a strong deterrent for any other companies thinking of suing Google or one of its partners.

Lest anyone be concerned that the purchase will transform Google into the world’s most formidable patent assertion entity, I’ll offer some words of comfort from my favorite book: DON’T PANIC. The price alone is enough to suggest that Google’s bidding is not based on the enforcement value of the patents. That’s not to suggest that you couldn’t generate a billion dollars or more in licensing revenue with the patents, but if that was your plan, you’d be taking an enormous risk relative to the expected profit.

In all likelihood, Google doesn’t actually want the Nortel patents… but it knows that other bidders are looking at them, including potential frenemy Apple (bidding through RPX). Google would prefer that some of those other bidders not get them, so it did what it could: make the purchase as expensive as possible for anyone that might use those patents against Google.

Of course, if someone else ends up with the final bid, what does Google do when the lawyers come knocking on its door? Of course, they won’t, will they? Experience has shown that the Android-based enforcement has largely focused on handset makers and other down-stream implementers. This is the primary reason that secrecy is one of the keys to successfully securing freedom to operate under a patent portfolio. Until you’re reasonably assured that the deal is actually going to go through, it’s generally not to the operating company’s advantage to have its identity and intentions known, which is one of the main reasons why last week’s covenant not to sue auction was so critical. As auctions like that begin to pick up steam, very public bidding wars over control of a portfolio will largely disappear. Google’s move may represent the last and largest of an endangered species.

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Discussion

Since Intellectual Ventures started suing, I now completely disbelieve the claims of any business entity that it is buying up patents for “defensive purposes only.” However, even when it does inevitably start suing, Google will likely be able to evade the “patent troll” label (and thus take advantage of judicial preference for “practicing” entities over NPEs/PAEs), since it also engages in R&D. Clever.